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New law allows for higher fines for cartel infringements in the Netherlands

On 1 July 2016, a new law will enter into force which substantially increases the statutory maximum of fines that the Dutch competition watchdog, the Authority for Consumers & Markets ("ACM"), can impose for violations of competition law and other laws (such as the Postal Act). Despite strong opposition against this law, remarkably also by ACM itself, the new law creates possibilities for ACM to impose higher fines.

Currently, ACM can impose a maximum fine of (i) EUR 450,000 on a company or, should this be higher, (ii) up to 10% of the worldwide (group) turnover of the company. On a natural person a maximum fine of EUR 450,000 can be imposed.

The new law increases the fixed amount of EUR 450,000 to a maximum of EUR 900,000, both for companies and natural persons. The relative amount of up to 10% is significantly increased by the introduction of a minimum of 10% and a maximum 40% of the worldwide (group) turnover. This range is based on the assumption that cartel infringements on average last anywhere from 1 to 4 years. Depending on the duration of the infringement, the maximum fine will be anywhere between 10% (for infringements of one year or less) and 40% (for infringements of four years or more).

In case a company was already fined for a similar infringement and the decision thereto became final five years prior to the statement of objections, the cap will be doubled. This means that the maximum fine could, in some circumstances, be as high as 80% of the worldwide (group) turnover of the company concerned. This can be illustrated as follows:

Assumption: In 2022, ACM imposes a fine for a cartel infringement that lasted from 1 July 2016 until 1 July 2020 (four years). The fine is imposed on a company with a worldwide (group) turnover of 100 million. Three years prior to ACM's decision to impose a fine, the highest Dutch administrative court confirmed a cartel decision of ACM that dated from 2010 of which this company was also subject. As a consequence, the (earlier) cartel decision became final.

This new calculation method will apply for infringements that commence on or after 1 July 2016. While the manner in which fines will be calculated will remain largely the same, it becomes less likely that the fines exceed the maximum thresholds and will therefore be capped.

The legislative change has also lead to a change of ACM's Fining guidelines. Besides the increased maximum fines, the guidelines include a calculation scheme for fines imposed on natural persons exercising de facto leadership over a violation. This scheme takes the size of the violating company as a premise. It expects that managers of larger organizations have a better understanding of the relevant laws and regulations. A violation of these laws and regulations by such managers should therefore, according to the new guidelines, be punished harsher. These guidelines will also enter into force on 1 July 2016.

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